RaaS - Research as a Service

Empire Energy Group Limited (EEG.ASX) is a junior oil and gas producer and explorer with onshore Northern Territory and US oil & gas assets. EEG has announced a transformational deal to acquire an operated 82.5% interest in five tenements across the Beetaloo Sub-Basin in the Northern Territory. The acquisition, with an estimated value of $54.7m (based on yesterday’s close), will more than double EEG’s Prospective Resource to 41 TCFe, comprising 37 TCF gas and 657 MMbbls liquids (condensate and oil). Empire’s 2C Contingent Resources have increased more than 350%, comprising 170 BCF gas and 2.9 MMbbls liquids. The liquids offer the potential to substantially enhance the economics of future production via lower drilling costs and liquids “credits”. The vendor, Pangaea (NT), will be issued 140m shares in EEG, $5m cash and 8m unlisted options with an exercise price of $0.70/share. Pangaea’s controlling shareholder, Paul Fudge, a pioneer of Queensland’s coal seam gas industry, will join EEG’s board. The deal is subject to EEG shareholder and NT Government approvals, with an expected completion of June 2021. EEG is in a trading halt, pending the outcome of a capital raising (estimated at $30m) to fund the acquisition and future drill program. Details of the capital raise are yet to be released.

Empire Energy Group Limited

• 14 Apr 21
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BANXA Holdings Inc (TSX-V:BNXA) is a global Payments Service Provider (PSP) serving the digital asset/cryptocurrency industry. It does so by using its platform as a “bridge” between the fiat/cash/banking system and the digital asset/exchange system. The company is headquartered in Australia where it has pioneered easy to access, local payments platforms for retail investors to acquire cryptocurrencies. More recently it has expanded its infrastructure to the B2B market, partnering with the leading cryptocurrency exchanges, including OK Group, Binance, KuCoin and EDGE Wallet. It has also expanded to the UK, the European Union, USA and Canada. The company has reported Q3 FY21 (March quarter) transaction payments value (TPV) of A$205m, a 695% increase on Q3 FY20’s TPV and an 84% jump on Q2 FY21. The growth was driven by an acceleration of volumes across the quarter with March 2021 TPV lifting 13% on February which in turn increased 29% on January. Year to date TPVs are A$400m, well ahead of our initial forecasts. We have revisited our estimates and are now forecasting Q4 FY21 TPV of A$256m (representing a 450% increase on Q4 FY20 and 25% increase on Q3 FY21) to bring total TPV for FY21 to A$653m (previously A$477m).

Banxa Holdings, Inc.

• 13 Apr 21
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Consolidated Zinc Ltd (CZL.ASX) is a junior mining and exploration company, listing on the ASX in June 2006, holding a 100% interest in Plomosas Zn-Pb-Ag mine in Chihuahua, Mexico, where commercial zinc production was re-established in December 2018. The company is set to realise greater economic returns from its Plomosas mine through 2021 by delivering improved commercial outcomes and profitability from increased metal recoveries, more optimal mining and cost reductions resulting from greater direct operational control. With global economic growth expected to be strong in a post-COVID world, the outlook for industrial metals remains robust although this remains a critical risk to the short-medium term outlook. Whilst CZL is a ‘one-asset play’ at the moment, its tenement holdings around Plomosas are highly prospective with a high probability of delivering project extensions and new deposits subject to successful regional exploration and evaluation.

Consolidated Zinc Limited

• 13 Apr 21
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Future First Technologies Limited (ASX:FFT), formerly known as PS&C Limited, is building a portfolio of digital assets that seek to make life simpler and safer. The company owns two key businesses, farmbuy.com and Asset Vision, which it respectively acquired in April and November 2020, and convertible notes in a third business, 1derful.com.au. These acquisitions came amidst the divestment of the company’s previously held assets, several companies operating under its Melbourne Consulting business banner and a cybersecurity business. The sale of these businesses netted FFT more than $39m which allowed the company to pay down debt, provide capital for future acquisitions and working capital, and undertake a share buyback as a capital return to shareholders. The company completed the $0.05/share buyback of 147.72m shares in December 2020, at a total consideration of $7.38m, leaving it with $9.3m in the bank at period end. Having switched from IT & security consulting services into high growth technology companies, FFT is well positioned to benefit from the market’s appetite for exposure to SaaS-style revenues. We initiate coverage with a base case DCF valuation of $0.17/share which incorporates modelling for both farmbuy.com and Asset Vision.

Future First Technologies Ltd.

• 12 Apr 21
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Shekel Brainweigh Limited (ASX:SBW) has announced the issue of a US$5m 4-year convertible note to a single investor, Kvutzat Yavne, a Kibbutz from the central district of Israel. The note holder will receive a 7% interest rate paid quarterly and have the right to convert ALL notes into equity two years from the issue date, or upon a transaction involving the sale of all or part of the business at 75% of the 25-day VWAP. For existing shareholders the company now has significant funding and a two-year window to deliver both renewed sales in the core scales business and meaningful sales in the new retail innovation division to ensure a higher share price and limited equity dilution. There are a number of positives for sales growth heading into CY21 including the first “Hubz” vending kit sales expected from Q2CY21, the annualisation of three new scales customers late in 2H20 and an expected “FastTrack” self-checkout launch in 2HCY21. The group is also cycling a 10% decline in retail self-checkout sales and a 45% decline in own brand weighing equipment. From a numbers viewpoint we have increased our operating costs by 12% or US$1.2m as new human resources are added, while incorporating for the first time some revenue from “Industrial special projects” given greater resources.

Shekel Brainweigh Ltd.

• 01 Apr 21
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Stealth Global Limited (ASX:SGI) has reported statutory results following their trading update mid-February, and we have fine-tuned our numbers from our update (Underlying sales momentum set to accelerate, February 18 2021) accordingly, with changes at the margin. The key message continues to be the group is well placed to grow revenue and earnings over the next 12-months, driven by 1) easy comparable period sales beginning Q421 (neutral Africa impact, and when Australian sales declined ~20% early in the quarter) and into 1H22 (underlying 1HFY21 Australian sales were down ~7%), 2) a full 12-month contribution from the C&L Tool Centre acquisition, which should contribute ~$14m in revenue (and represent ~20% of group sales) and ~$1.4m EBITDA (>50% of underlying earnings), 3) the BSA potential beyond the UK lockdown, supported by the launch of a new on-line portal, 4) a cost structure which has been built for growth and should not require additional resources to accommodate our forecast medium-term sales growth (promising operating leverage), and 5) the cycling of the exit from Africa, which has been a drag on group margins and comparable sales growth. Subsequent to the 1H21 result release selected peers have reported generally solid numbers (SNL, CYG and CLT), and as a result we have seen a widening in the FY21 EV/sales discount of SGI to the peer group, with SGI trading at a 35% discount to the nearest peer.

Stealth Global Holdings Ltd.

• 24 Mar 21
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